Summary
For the financial year 2022, cBrain has announced an expected revenue growth of 20-25% and earnings before tax of 15-20%, and in August cBrain raised expectations for earnings before tax to 18-22%. cBrain maintains its expectations and is happy about continued good development, with both new customers and an ongoing influx of new projects with existing customers.
As a result of the continued positive development, cBrain, as the next step in the company's long-term growth plan, has advanced and begun the implementation of a number of new strategic initiatives. The two central elements in the revised strategic plan, which covers the period 2023-25, are an increased focus on F2 climate software and the establishment of a partner channel.
In October, cBrain moved to a new domicile at Kalkbrænderiløbskaj 2 in Nordhavn. The building was designed by the internationally recognized architect Jørn Utzon, and the building has undergone an extensive renovation over the past year. In parallel with the move-in, cBrain has used its strong cash position to purchase the building.
Continued progress in Denmark
Today, cBrain has more than 75 Danish customers in the public sector, including 17 of the 21 Danish ministries, and the customer base is continuously growing.
F2 was originally designed and built in close collaboration with a number of ministries, and it was here that cBrain made its first breakthrough in the public sector. But as F2 has been further developed and offers an ever wider standard functionality, more and more agencies have also chosen to introduce F2 as their digital platform.
In the spring, cBrain was able to announce that the Danish Ministry of Higher Education and Science had chosen F2 as the agency's new digital platform, and in August cBrain was able to announce that the Danish Working Environment Authority had entered into an agreement with cBrain.
The Danish Working Environment Authority is in the process of an ambitious and extensive modernization of the agency's system landscape, and in connection with this the agency has chosen to introduce F2 as a digital platform for use, e.g. electronic case and document management and management services in the agency.
The continued influx of new agencies is therefore important for cBrain, because it expands and supports cBrain's market potential as a supplier of professional systems.
Influx of new agencies expands cBrain's market potential in Denmark
The agencies continuously tender many different types of professional systems which they want modernized and further developed.
But public digitization is often characterized by large, unmanageable, and expensive IT projects. This is because many authorities still purchase customized solutions when they modernize and further develop their professional systems.
cBrain challenges the market by offering standard software instead of customized solutions. This gives customers significant advantages, both in relation to delivery speed, costs, and quality.
For the many authorities who are used to large and comprehensive IT projects, it can be difficult to believe that it is possible to support digitization based on standard software. But as more and more agencies introduce F2, cBrain finds that the agencies are increasingly beginning to see F2 as an alternative to the classic customized solutions.
New municipal pilot project in Denmark
cBrain has successfully delivered F2 for management services to The City of Copenhagen, and this solution is now used by several thousand users in the municipality. In continuation of this, cBrain has been invited to carry out a pilot project in another of the large Danish municipalities, where F2 is now being tested for use in management services in one of the municipality's magistrates.
It will of course have great market value for cBrain if the municipality chooses to continue with F2 as an extension of the pilot project.
Continued progress in Germany
In June 2021, cBrain announced that the company had been awarded a framework agreement in Germany, which includes the delivery of between 5,000 and 10,000 F2 user licenses, as well as a number of expansion modules and software maintenance. Depending on the timing of the delivery of user licenses and the exercise of options, the agreement will have a total value for cBrain of up to DKK 250 million.
cBrain works on projects in a number of different departments at the customer, and the implementation is progressing according to plan. As a result, the customer has purchased a larger number of software licenses, which has helped lift cBrain's exports in the first half of the year to 37% of total revenue.
In Germany, cBrain has so far had a narrow focus, as the goal has been to establish a bridgehead and gain a foothold as a supplier to one of the largest German authorities. This has been successful, and cBrain has established a reference position, which now forms the basis for a slightly broader effort on the German market.
It is therefore pleasing that cBrain was able to announce in May that the company had won a public EU tender with Investitionsbank Schleswig-Holstein, which is a publicly owned bank in the state. This is about the resale of a professional system that has been developed in collaboration with Danish authorities, as cBrain must deliver F2 for use in grant management.
The delivery to the German bank is progressing according to plan and thus underpins cBrain's continued progress on the German market.
Climate software
As a supplier to e.g. The Danish Environmental Protection Agency, cBrain has built up expertise and a broad portfolio of F2-based specialist systems, which support the authorities' work in relation to the global fight against climate change.
cBrain calls these types of specialist systems "climate software", and the solutions support, for example, subsidy schemes, supervision as well as administrative decisions and permits. Through the collaboration with e.g. The Danish Environmental Protection Agency, cBrain has built up an ever-widening library of F2 climate software solutions, which are configured to support the authorities' climate efforts.
Speed is a decisive factor in the fight against global climate change, and at the same time the basic F2 technology makes it possible to deliver individual and complex professional systems much faster than traditional customized solutions. This gives cBrain a competitive advantage.
Climate software in Denmark
In July, cBrain was able to announce that the company was to deliver F2 as a new digital platform to the Danish Climate Forest Foundation.
Since 1990, global deforestation has had a rate equivalent to 800 soccer fields per hour, and everywhere in the world afforestation is therefore a crucial part of climate action plans. In Denmark, the Climate Forest Foundation must contribute to the achievement of the ambitious Danish climate goals through the establishment of forests and the removal of carbon-rich lowland areas.
The new F2 solution for the Climate Forest Foundation must support grant management, including being able to receive applications based on map data, ensure efficient case processing and journaling, and support the foundation's other work.
In less than 3 months, cBrain has managed to design, configure, and put into operation the new specialist solution at the Danish Climate Forest Foundation. This supports cBrain's ability to deliver professional systems in a very short time.
In parallel with the project at the Climate Forest Foundation, cBrain has carried out a number of pilot projects with various authorities that are interested in using F2 in connection with energy efficiency and reduction of CO2 emissions.
The new Danish climate projects are important for cBrain, not least in an international context, because they help expand cBrain's reference position and library of climate software solutions.
Climate software internationally
Climate software is increasingly acting as a door opener for cBrain in new markets. cBrain has so far announced orders, based on F2 climate software, in Egypt, Guyana, Kenya and the USA, and contact with this type of customer often takes place through participation in international events.
In the spring, cBrain entered into an agreement with a county in California for the delivery of an F2-based solution, which will support the authority's work in connection with the capture of CO2 ("Carbon Farming") and more sustainable agriculture ("Sustainable Farming").
In September, cBrain participated as part of the Danish delegation at the UN General Assembly in New York and in the subsequent delegation trip to Washington, where the Danish government had a special focus on climate action. This gave cBrain the opportunity to meet several American authorities, where cBrain could talk about the project in California.
In Kenya, cBrain has just delivered the first version of the new national digital platform to support extended producer responsibility. At the same time, cBrain has hired its first local employee in Kenya, with the aim of supporting the further spread of cBrain's climate software.
In the spring, cBrain announced that an agreement had been made with the Environmental Compliance Office (ECO), which is a department under the Federation of Egyptian Industries (FEI). Here, cBrain has now configured (set up) an F2 solution to support the issuance of loans to Egyptian companies in connection with energy efficiency.
Energy efficiency is a central element of the national Egyptian climate effort, and as part of this effort, Egyptian companies can take out loans with a view to restructuring their production so that it becomes more energy efficient. With the new F2 solution, Egyptian companies can apply for loans via a self-service solution in English and Arabic, after which loan applications are processed in F2.
The agreement with ECO is a result of meetings at COP26 in Glasgow, where cBrain met representatives from the Egyptian government and ECO. cBrain will participate as part of the Danish delegation at COP27 in Sharm El Sheikh in Egypt in November. Here, cBrain has been invited to a joint Danish-Egyptian presentation of the new solution, i.a. with a view to underpinning international cooperation and reuse of solutions.
cBrain takes the next step in the company's growth plan
Public digitization constitutes one of the largest markets in the world, and by far the largest part of the market is serviced by suppliers who offer customized solutions based on the integration of software components and modules.
cBrain challenges this market by offering standard software, which gives customers significant advantages, both in relation to price, quality, and delivery speed.
cBrain has succeeded in building a strong Danish reference position. Today, more than 75 Danish authorities base their digitization on cBrain’s F2 standard software, including 17 of the 21 Danish ministries, and at the same time, since 2018, Denmark has ranked at the top of the UN's list of the countries that are best for public digitization.
Starting from a unique position as a supplier of standard software with a strong Danish reference position, cBrain is in the process of executing an ambitious international growth plan.
cBrain's strategy differs in that it is based on standard software and organic growth. While many other growth companies seek growth through acquisitions, cBrain grows organically, which i.a. means that growth does not require external financing.
The results up to now have shown that cBrain continues to manage to execute its international growth plan.
Through the past 3 financial years, the period 2019-2021, cBrain has thus shown an average revenue growth of 23% and average annual earnings before tax (EBT) of 18%. At the same time, we have succeeded in establishing an export which grew to 24% of the total revenue in 2021.
cBrain has financed the growth without loans, and the positive earnings mean that cBrain has continuously built up a solid cash reserve.
Strategic plan 2023-2025
As a result of the continued positive development, cBrain, as the next step in the company's long-term growth plan, has advanced and begun the implementation of a number of new strategic measures.
The two central elements in the revised strategic plan, which covers the period 2023-25, are an increased focus on F2 climate software and the establishment of a partner channel.
Implementation of the strategic plan includes both organizational and product initiatives. cBrain is, among other things, in the process of building a dedicated climate unit, which has the task of positioning and developing cBrain's business as an international supplier of climate software.
As a supplier of climate software for authorities, cBrain can directly contribute to the global fight against climate change. At the same time, cBrain's rapidly growing library of climate solutions opens up dialogue with authorities across more and more countries, and climate software can thus become an accelerator for further exports.
As part of the revised strategic plan, it is also cBrain's goal to lift growth without requiring a corresponding increase in the number of employees.
This can, among other things, be achieved by customers themselves, or with the help of independent consultants, taking over a larger part of the tasks that cBrain currently handles in connection with configuring and implementing F2. cBrain calls this “F2 for Partners”.
F2 for Partners
cBrain today possesses a technology which, through "configuration", makes it possible to offer individual professional systems, both much faster and with less cost than customers are used to, because it is based on standard software.
cBrain will now offer this technology in the form of F2 tools, which enable customers, either themselves or with the help of independent consultants, to configure and thus "build and maintain" their own professional systems.
The new F2 tools, which enable customers to build and maintain individual professional systems themselves, will be marketed in the form of a number of new products, and it is expected that the new products as an independent product line will contribute to an increased turnover.
Relocation of tasks will presumably mean lower growth rates over a period of time, because cBrain's revenue from consulting services is reduced as the customers themselves and/or external consultants take over these tasks. On the other hand, transferring tasks to customers and/or consultants could strengthen cBrain's position and growth opportunities.
cBrain has moved to a new domicile
In October, cBrain moved to a new domicile at Kalkbrænderiløbskaj 2 in Nordhavn. The building is designed by the internationally recognized architect Jørn Utzon, and the building has undergone an extensive renovation over the past year.
As a new headquarters, the house underpins cBrain's international growth plans, i.a. as an attractive location for foreign visitors. At the same time, cBrain can offer its employees a particularly attractive and creative environment.
In connection with the move, cBrain has used its strong cash position to purchase the building. The ownership gives cBrain great freedom to develop and utilize the building, while at the same time underpinning financial consolidation.
Inquiries regarding this notice may be directed to
Ejvind Jørgensen, CFO, cBrain A/S, ir@cbrain.com, +45 2594 4973